Radian Group Inc.’s wholly owned subsidiary, Radian Guaranty, has obtained $353 million of fully collateralized excess of loss reinsurance coverage from Eagle Re 2023-1 Ltd. covering eligible mortgage insurance policies written by Radian Guaranty from April 1 to December 31, 2022.
Eagle Re has funded its reinsurance obligations by issuing four classes of mortgage insurance-linked notes (ILNs) with a 10-year maturity and 5-year call option to eligible third-party capital markets investors in an unregistered private offering.
According to Radian Group, the ILNs are non-recourse to the firm and its subsidiaries and affiliates.
The ILNs issued by Eagle Re consist of the following four classes: $110,337,000 Class M-1A Notes with a coupon equal to one-month SOFR plus 200 basis points. $145,644,000 Class M-1B Notes with a coupon equal to one-month SOFR plus 395 basis points. $75,029,000 Class M-2 Notes with a coupon equal to one-month SOFR plus 520 basis points. $22,067,000 Class B-1 Notes with a coupon equal to one-month SOFR plus 685 basis points.
Radian explained that after closing, investors have the option to “exchange their M-1B Notes for proportionate interests in Class M-1B-1 Notes, Class M-1B-2 Notes and Class M-1B-3 Notes (Exchangeable Notes), and the Exchangeable Notes may be exchanged for Class M-1B Notes with the same proportionate interest.”
The Notes have been assigned ratings by DBRS Morningstar of BBB (low) (sf) for Class M-1A; BB (sf) for Class M-1B; B (high) (sf) for Class M-2; and B (sf) for Class B-1 (sf).
You can read more about this mortgage insurance-linked notes transaction, and every other in the the catastrophe bond and insurance-linked securities Deal Directory of our sister publication, Artemis.
